Incomes Fall, Hunger Worsens as Bush Says 'We're Doing Fine'

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http://www.truthout.org/docs_2006/022806D.shtml

 

 

Incomes Fall, Hunger Worsens as Bush Says 'We're Doing Fine'

By Abid Aslam

OneWorld.net

 

Tuesday 28 February 2006

 

Washington, D.C. - The average American family has taken a

financial tumble and millions in the country go hungry despite

President George W. Bush's sunny assessment of the U.S. economy, say

federal data and economists.

 

Bush talked up the nation's wealth last week during a speech in

Milwaukee. " We're doing fine, " he said and described the economy as

" strong and gaining steam. "

 

Economic growth had clocked a respectable 3.5 percent,

unemployment had been held down to 4.7 percent with more than four

million new jobs created in the past 30 months, and after-tax income

had risen eight percent since 2001, he said.

 

Within days, however, the Federal Reserve reported that average

incomes after adjusting for inflation actually had fallen between 2001

and 2004.

 

At the same time, the number of Americans who need emergency food

aid to survive had swollen to more than 25 million even before

hurricanes Katrina and Rita struck, the nation's largest network of

food banks said in a separate report.

 

Many families continued to struggle in the wake of the 2000 stock

market collapse and 2001 recession, the central bank said in its

latest triennial " Survey of Consumer Finances, " released Thursday.

 

Inflation helped to eat away at the average American family's

income, reducing the total to $70,700 in 2004-a loss of 2.3 percent

from 2001. That followed a 17.3 percent gain in average incomes

between 1998 and 2001 and 12.3 percent in 1995-98, the Fed said.

 

Median family income showed a slight increase of 1.6 percent to

reach $43,200 in 2004, up from $42,500 in 2001.

 

Half of all households are understood to stand above, and half to

fall below, the median point, which is used to represent the " typical "

rather than " average " family.

 

Economic analysts said the latest Fed's findings confirmed earlier

research showing that the average American family's finances were

deteriorating.

 

" Every American should be able to achieve middle class economic

security, a hallmark of national and household stability in this

country, " said Tamara Draut, director of the economic opportunity

program at research and advocacy group Demos.

 

" But the Federal Reserve's findings spotlight trends that are

causing economic fragility in today's middle class and are closing the

door on low-income Americans. "

 

The income situation appears to be worsening.

 

Last year proved to be the worst one on record for

inflation-adjusted income, said Jared Bernstein, senior economist at

the Economic Policy Institute, a Washington, D.C.-based think tank.

 

" Wages and compensation for the average worker are lagging

inflation despite strong productivity growth, " Bernstein said, citing

figures from last month's " Employment Cost Index " report from the

government's Bureau of Labor Statistics.

 

" Averaging over all of 2005, real wages fell 0.9 percent-the

lowest annual result on record-while compensation's essentially

unchanged rate from 2004 provides its worst year on record as well, "

Bernstein added in an analysis of the BLS report. The term

" compensation " refers to wages plus benefits.

 

Draut, at Demos, said she was worried by the latest Fed report's

findings that " growing numbers of American households face mounting

debt and financial instability. "

 

In particular, more than 76 percent of households carry debt, up

since 2001. Of households in debt, the median amount of debt, $55,300,

amounts to 128 percent of the median household income.

 

" A greater number of people reported not saving money in 2004 than

in 2001. Only 41 percent save regularly, " Draut said, citing the Fed's

figures. " That's a foreboding number for a nation with 76 million

people reaching retirement age over the next 25 years. "

 

The Fed found that four in 10 senior citizens older than 75 years

shouldered debts in 2004, up from 29 percent in 2001.

 

Americans also have been piling up credit card debt, which grew 10

percent in the median household and 15.9 percent in the average

household. Most of the increase occurred in the " middle class, " which

the Fed defined as the fifth of the population with a median income of

$42,500.

 

" Stagnant wages and skyrocketing healthcare, education and housing

costs, plus greater job instability has pushed America's families

right to the limit, and they're borrowing on high-cost credit just to

make ends meet, " said Draut.

 

Home equity loans also have become bigger and more common, with

many homeowners using the cash-out refinancing to pay down their

credit card debts and to recover expenses they can't cover with their

earnings, she added.

 

Rising household debt and stagnant real wages sapped median net

worth, a tally of assets and liabilities. Median net worth grew by 1.5

percent in 2001-04, down from 10.3 percent in 1998-2001, the Fed

report said.

 

The gap between wealthy and poor also has widened, the Fed said.

America's wealthiest 10 percent saw their net worth rise by 6.1

percent to an average of $3.1 million while the bottom 10 percent saw

theirs fall from zero in 2001 to minus $1,400-meaning they owed this

much more than the value of all their assets-in 2004.

 

Data on net worth would have proven even more anemic were it not

for big gains in the notional value of real estate-something that, at

least hypothetically, boosted homeowners' financial standing, the Fed

and analysts agreed.

 

" Americans are keeping their families afloat by putting their

greatest asset at risk, " said Draut.

 

Yet they appear to be among the fortunate, according to America's

Second Harvest, which supports 50,000 food-aid charities nationwide.

 

More than 25 million Americans were forced to resort to food

donations from the organization's affiliates last year, an 8 percent

increase over 2001, it said.

 

Nine million children younger than 18 and three million senior

citizens stood among the hungry, America's Second Harvest said in its

" Hunger in America 2006 " report.

 

" About 70 percent of the clients seeking emergency food assistance

are living below the federal poverty line, " the private philanthropy said.

 

" Nearly 40 percent have at least one adult working in their

household, " it added.

 

Those figures suggest that increasing numbers of working Americans

do not earn enough to feed their families.

 

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